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If A has minimum profit guarantee of twenty thousand rupees and actual share is seventeen thousand rupees what is deficiency?

Answer and explanation

Correct answer: Three thousand rupees

A minimum profit guarantee promises that partner A will receive at least Rs 20,000 as a share of profit. The actual amount first calculated for A is Rs 17,000, so the guaranteed minimum has not been reached. The deficiency is the shortfall that must be made good according to the terms of the guarantee.

To find it, subtract the actual share from the guaranteed amount: Rs 20,000 − Rs 17,000 = Rs 3,000. Thus A is short by three thousand rupees. This is not the whole actual share or the whole guaranteed amount; it is only the difference between them. Therefore option A is correct. The agreement would determine which partner or partners bear this deficiency.

Related tags

Guaranteed ProfitDeficiencyNumerical

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